Anton Petrenko, concept paper draft 3, 20 January 2014
PUTTING LOCAL FOOD ON THE TABLE:
ENHANCING COMPETITIVENESS OF PRODUCERS OF LOCAL AND REGIONAL FOOD
IN THE SOUTH BALTIC REGION
Anton Petrenko, Philipp Brinkman, and Viktoria Olsen
January 2014
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Anton Petrenko, concept paper draft 3, 20 January 2014
CONTENTS
LIST OF FIGURES
4
LIST OF TABLES
4
ABBREVIATIONS
4
ABSTRACT
5
CHAPTER 1. INTRODUCTION
(Anton Petrenko)
1.1 Practical problem
1.2 Research problem
1.3 Research questions
1.4 Research objective
1.5 Research design
1.6 Methodology
1.7 Regfood project
1.8 Structure of the report
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8
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CHAPTER 2. CONCEPT OF LOCAL AND REGIONAL FOOD
(Anton Petrenko)
2.1 Definitions
2.2 Conceptual analysis
10
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CHAPTER 3. DESCRIPTION OF ENVIRONMENTAL CONDITIONS AND
ORGANIZATIONAL CAPABILITIES OF PRODUCERS OF L OCAL AND
REGIONAL FOOD IN THE SOUTH BALTIC REGION
(Philipp Brinkman, and Viktoria Olsen)
3.1 External threats
3.2 External opportunities
3.3 Internal strengths
3.4 Internal weaknesses
CHAPTER 4. CONTENT ANALYSIS OF NATIONAL PAPERS (Philipp Brinkman, and Viktoria Olsen)
4.1 The role of partnership building in strengthening
competitiveness of producers of local and regional food
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Anton Petrenko, concept paper draft 3, 20 January 2014
(Philipp Brinkman)
4.2 The role of marketing in strengthening competitiveness
of producers of local and regional food
(Viktoria Olsen)
CHAPTER 5. DEVELOPING BUSINESS STRATEGY FOR LOCAL AND REGIONAL
FOOD PRODUCERS IN THE SOUTH BALTIC REGION
(Anton Petrenko)
CHAPTER 6. CONCLUSION
(Anton Petrenko, Philipp Brinkman, and Viktoria Olsen)
5.1 Discussion of findings
5.2 Intervention model
5.3 Recommendations
REFERENCES
APPENDIXES
Appendix A. Questionnaire
Appendix B. National report, Denmark
Appendix C. National report, Sweden
Appendix D. National report, Germany
Appendix E. National report, Lithuania
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LIST OF FIGURES
Figure 1
Types of food systems
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Figure 2
Venn diagram of concepts of “local food” and “regional
food”
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Figure 3
Conceptual typology of “competitiveness of food producers”
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Figure 4
Situating different types of food producers within the conceptual
typology
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Figure 5
“Assets-processes-performance” model of competitiveness
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Figure 6
Model of facilitating and inhibiting conditions of competitiveness
of producers of local and regional food in the South Baltic region
Figure 7
Intervention model
Figure 8
Expected effect of intervention strategies for increasing
competitiveness of local and regional food production
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Anton Petrenko, concept paper draft 3, 20 January 2014
LIST OF TABLES
Table 1
Definitional attributes of “local food” and “regional food”
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Table 2
Conceptualization and measurement of “competitiveness of local
and regional food producers”
14
Table 3
“Reduced” data table
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Anton Petrenko, concept paper draft 3, 20 January 2014
ABSTRACT
Processes of globalisation have long been spurring the diffusion of bulk production in the food
sector in industrialized countries. However, since recently they have been countered by a growing
demand for local and regional food, which presents an opportunity for regional development in the
South Baltic region. This report, developed within the framework of the Regfood project, inquires
into external challenges and opportunities as well as internal organizational strengths and
weaknesses of local food producers, and suggests strategies that could facilitate competitiveness of
producers of local and regional food in the South Baltic region. Drawing on recent research and
empirical data from cases of Denmark, Germany, Lithuania, and Sweden, it defines a concept of
local and regional food, identifies structural constraints and organizational capacity-related
weaknesses of producers, and advocates for two strategies, i.e., partnership building and strategic
management. It concludes by presenting an intervention model that point to education of students
in local and regional food and the promotion of partnership among food producers, customers, and
authorities.
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CHAPTER 1. INTRODUCTION
1.1 Practical problem
Since the 1950s, processes of globalisation around the world have spurred the diffusion of industrial
food production in the food sector at the expense of local and regional food production. Yet, there
has recently arisen a renewed interest among customers, producers, and authorities in production of
local and regional food that combines distinct local identity, quality, and environmental
sustainability. This development presents an opportunity for the South Baltic region to promote
local and regional food production and, thereby, to contribute to its economic and social
development. However, in spite of these opportunities, sources of competitiveness of producers of
local and regional food producers in the South Baltic region are poorly understood and their
potential for regional development is yet to be fully explored and tapped into.
1.2 Research problem
Despite growing importance of local and regional food production for regional development, there
is, presently, a worrisome condition of ignorance among food researchers about conditions and
strategies that could inhibit and/or facilitate production and consumption of local and regional food.
Researchers need to articulate more clearly core features of “competiveness of local and regional
food production”, to understand better economic, political, and social conditions and processes that
influence competitiveness of producers of local and regional food, and to isolate among them those
enabling factors that could be promoted through targeted project interventions.
1.3 Research questions
This report addresses a set of substantive and empirical research questions: What specific factors
(e.g., environmental conditions and organizational capabilities) influence competitiveness of
producers of local and regional food in the food sector in the South Baltic region? What
interventions may enhance competitiveness of producers of local and regional food?
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1.4 Research objective
The research objective of this report is three-fold: First, it seeks to conduct a definitional analysis of
the concept of “local and regional food”. Second, it surveys environmental challenges and
opportunities as well as internal organizational strengths and weaknesses of producers of local and
regional food in four South Baltic-adjustet region in order to diagnose their current levels of
competitiveness in production of local and regional food and to evaluate the role of specific causal
conditions that influence their performance. Finally, it aims at identifying areas for intervention that
may further enhance levels of competitiveness of producers of local and regional food in the South
Baltic region.
1.5 Research design
To gain insight into the research question and to advance towards the research objective, the report
employs both deductive and inductive modes of inquiry. It begins with a deductive development of
a theory of conditions of competitiveness of producers of local and regional food on, based on
literature in economic and business management fields. It discusses conceptual structure of the
outcome condition of interest, i.e., competitiveness of producers of local and regional food, and
validates measures of this concept empirically on qualitative data from national reports. In addition,
it focuses on two principal enabling conditions, i.e., partnership building and marketing, and
discusses processes and mechanisms of their facilitating influence on competitiveness of producers
of local and regional food in the South Baltic region. Finally, it lays out an intervention model that
links two intervention strategies, education and promotion of partnership-building with previously
identified enabling conditions.
1.6 Methodology
Methodology-wise, the report employs multiple methods of small-N comparative-historical case
study analysis such as cross-case analysis of multiple cases (Eckstein 1975; George 1979; George
and McKeown 1985; George and Bennett 2005; Gerring 2007; Lijphart 1971, 1975; Yin 2003),
narrative comparative analysis (Mahoney 2000; Rueschemeyer and Stephens 1997), patternmatching (Campbell 1975; Skocpol and Sommers 1980; Trochim 1989), and ideal-typical
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comparison (Weber 1968; Collier, LaPorte, and Seawright 2012). In addition, the paper draws on
methodological literature on concept formation and measurement (Adcock and Collier 2001; Bailey
1994; Collier and Mahon 1993).
1.7 Data
Empirically, this report draws on primary and secondary, qualitative and quantitative, data from
interviews of producers of local and regional food, public surveys of customers, and official
statistics about outputs of national food systems, compiled in four national reports from Denmark,
Germany, Lithuania, and Sweden. In spite of efforts to structure the process of data collection
around theoretically relevant questions, national reports provided inconsistent datasets and
precluded straightforward application of standard small-N comparative-historical methods such as
Millian “method of agreement”, “method of difference” or “method of concomitant variation”
(Lijphart 1971, 1975; Przeworski and Teune 1970; Skocpol and Sommers 1980) or Qualitative
Comparative Analysis (Ragin 1987; 2000, 2008). Nevertheless, available data provides sufficient
basis for building of the conceptual framework and intervention model. The empirical validation of
the framework and the model requires, however, additional and more systematic data collection and
analysis.
1.8 Structure of the report
The report consists of four chapters. In the first chapter, the practical and research problems are
formulated and research questions, design, methodology, and data limitations are discussed. The
second chapter offers definitions of core concepts and elaborates the conceptual framework. The
third chapter further elaborates key study variables in the conceptual framework of the
competitiveness. The fourth chapter draws together narrative evidence underlying conceptual
framework and the intervention model. The final chapter discusses the findings, presents the overall
intervention model, and puts forward recommendations.
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CHAPTER 2. CONCEPTUAL FRAMEWORK OF COMPETITIVENESS
This section develops a conceptual framework of conditions that influence the outcome of interest,
i.e., competitive performance of producers of local and regional food. It proceeds in three steps:
First, it offers definition of the core empirical concept of “local and regional food” and “competitive
performance of producers of local and regional food”; Second, it reviews theoretical perspectives
on sources of firm-level competitiveness that are currently prevalent in economics and management
studies; Third, it applies “assets-processes-performance” model of competitiveness as an analytic
tool for specifying clusters of facilitating and inhibiting conditions of competitiveness of producers
of local and regional food in the South Baltic region. The resulting conceptual framework is
developed both inductively and deductively. Theoretically, it borrows from analyses of
competitiveness in economic and management literature and, empirically, it draws on qualitative
and quantitative data from four national reports from Denmark, Germany, Lithuania, and Sweden
(see Annex A).
2.1 Definitions
The outcome of interest in this report refers to “competitive performance of producers of local and
regional food”, which is a composite concept. To understand meaning of this concept and to clearly
identify its empirical referents, it is required to devise separate definitions for its constitutive terms,
i.e., “local and regional food”, “producers”, and “competitive performance”.
There is no legal or universally accepted definition of “local and regional food”. This
term is derivative from the concept of “food system”. Food systems comprise all aspects of food
production: the way the food is grown or raised; the way the food is harvested or slaughtered; and
the way the food is processed, packaged, or otherwise prepared for consumer purchase and food
distribution, i.e., where and how the food is sold to consumers and how the food is transported
(Tansey and Worsley 1995; Wilk 2006; Martinez et al. 2010). Food systems can be divided into
several major types: the global industrial food system, cross-national food system, tied by common
system of regulations (e.g., the EU), national, and local food systems, of which there are many. The
main difference among these food systems concerns both the scope of their geographic reach and
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the method of food production, processing, and distribution. Figure 1 below presents a simplified
typology of food systems emphasizing the scope of their geographic reach and embeddedness of
local food system in larger food systems Regional food systems could comprise several local food
systems and run across national borders.
Figure 1.
Types of food systems
Global industrial food system
EU food system
National food system
Local food system
In addition to the geographic aspect, the term “local food system” describes a method of food
production and distribution: Food is grown (or raised) and harvested close to consumers' homes,
then distributed over much shorter distances than is common in the conventional global industrial
food system. In general, “local food system” is associated with sustainable agriculture, while the
global industrial food system is reliant upon industrial agriculture. Based on this discussion of food
systems, it is possible to identify the following definitions of the concept of “local food” and
“regional food”: “Local food” refers to food raw materials, food ingredients and/or meals that have
been produced (e.g., grown or raised), processed (e.g., packaged or cooked), and consumed within a
local area (100 - 200 km), have a short supply chain (with few intermediaries), and have been
produced in an environmentally sustainable and socially responsible manner. By contrast, “regional
food” refers to food products that have a distinct regional identity (e.g., label) and could be
consumed locally, nationally, and internationally.
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Given a complex structure (i.e., a partial overlap) of conceptual attributes of “local
food” and “regional food”, the meaning of the composite concept of “local and regional food” is
open to different interpretations. Table 1 specifies separate attributes of these two concepts and
presents different logical possibilities for constructing the composite concept.
Table 1.
Definitional attributes of “local food” and “regional food”
“Local
food”
“Regional
food
“Local
AND
regional
food”
“Local
OR
logical
food”
A1: Geography: Produced (e.g., grown or raised) and
processed (e.g., packaged or cooked) within a local area
(100 - 200 km)
Yes
Yes
Yes
Yes
A2: Geography: Consumed within a local area (100 200 km)
Yes
No
No
Yes
A3: Method of distribution: Has a short supply chain
(i.e., with few intermediaries)
“Yes
Yes
Yes
Yes
A4: Method of production: Produced in an
environmentally sustainable and socially responsible
manner
Yes
Yes
Yes
Yes
A5: Identity: Has a distinct regional identity (e.g., label)
No
Yes
No
Yes
Attributes
Columns 3 and 4 in Table 1 show two opposing logical interpretations of the concept “local and
regional food”. The first interpretation links the two constituent concepts through logical AND
while the second one does it with assistance of logical OR (Cohen and Nagel 1934; Nagel, Suppes,
and Tarski 1963; Ragin 1987). To illustrate graphically the partial overlap of the two concepts as
well as alternative interpretations of the composite concept, one can use Venn diagram, as shown in
Figure 2.
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Figure 2.
Venn diagram of concepts of “local food” and “regional food”
Local food
Regional food
A1
A3
A2
A4
A5
It becomes clear now that the logical structure of the concept of “local food” comprises the
conjunction of four attributes, i.e., A1 * A2 * A3 * A4. By contrast, the logical structure of the
concept “regional food” consists of the conjunction of four different attributes, i.e., A1 * A3 * A4 *
A5. In turn, the logical statement “local AND regional food” implies one set of common attributes,
i.e., A1 * A3 * A4, while the second logical statement “local OR regional food” stands for a
different set of attributes, i.e., A1 * A2 * A3 * A4 * A5. In this report, we are using the concept of
“local and regional food” in the sense of the second logical statement, i.e., “local OR regional
food” that comprises all five attributes, i.e., A1, A2, A3 A4, and A5.
In addition to the already defined term of “local and regional food”, the concept of
“competitive performance of producers of local and regional food” includes notions of “producers”
and “competitive performance”. The term “producer” appears to be not problematic and is used in
this report in its standard dictionary definition. According to Oxford English Dictionary, the term
“producer” designates “a person, company, or country that makes, grows, or supplies goods or
commodities for sale”. Based on this definition, the term “producer” in this report refers to a legal
economic agency (e.g., person or company) in the food market that grows or raises, processes,
packages or cooks food products or meals for sale. By contrast, the concept “competitiveness” and
“competitive performance” are multi-dimensional and multi-level concepts that have been variously
defined in literature on competitiveness in economic and management research (Chaudhuri and Ray
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1997; Collignon 2012; Coy 2006; Durand and Giorno 1990; Riley 2012). It will be thoroughly
discussed in Chapter 4 that offers conceptualization and measurement of all key study variables.
2.2 Developing a theory-based conceptual framework of competitiveness
Over the past three decades, research into features, measures, and sources of competitive
performance at firm, industry, region, and country levels has become a growth industry in the fields
of business management and international economics (Krugman 1994, 1996; Krugman and
Obstfeld 2003; McGahan 1999; Porter 1980, 1990, 1998, 2000, 2003). This section briefly reviews
literature of sources of competitive performance at a firm and industry level.
Traditional and new trade economic theorists have essentially relied on standard
economic theory of comparative advantage to explain variation in competitive performance of
firms, industries, and countries. They emphasized the role of opportunity costs of production, i.e.,
Ricardo’s labor theory of value and opportunity costs theory (Salvatore 2002); factor endowments,
i.e., the Heckscher-Ohlin theory (Salvatore 2002), and the internal and external scale of production
(Krugman 1990; Krugman and Obstfeld 2003) as key competitive assets in both free, monopolistic,
and oligopolistic trade markets. Figure 3 illustrates the model of competitiveness that underlies that
approach.
Figure 3.
Standard economist model of competitiveness
Factor endowments
Competitive performance at
firm, industry and country levels
Scale of production
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Figure 3 lays open two basic determinants of competitive performance of the firm, industry, and
nation: factor endowments and scale of production. Factor endowments commonly refer to natural
raw materials, labor, capital, human capital, and technology (Guber, Metha, and Vernon 1967;
Keesing 1966; Salvatore 2002). The scale of production aka economies of scale or increasing
returns has two aspects, i.e., external and internal. External economies of scale occur when
production efficiency, i.e., the cost per unit depends on the size of the industry while internal
economies of scale occur when the cost per unit depends on the size of the individual firm
(Krugman and Obstfeld 2003). Thus, each of these major determinants influences the level of
competitive performance and differences in either of these factors explain variation in
competitiveness among firms, industries and nations.
Students of competitiveness in business management area have approached the issue
of firms’ competitive performance on domestic and international markets from three broad
perspectives: “resource-based”, “process-centered”, and “assets-processes-performance”. The
resource-based perspective emphasizes the role of tangible and intangible assets (e.g., human
resources, technology, and organizational culture) that the firm can draw on in order to acquire and
sustain competitive advantage over its main competitors (Barney 1991; Barney, Wright, and
Ketchen 2001; Kogut and Zander 1992; Teece 1991). By contrast, process-centered perspective
points to the ability of the firm to deploy and develop available resources more effectively than its
competitors (e.g., flexibility, adaptability, focus on product quality and customers, strategy, and
innovativeness) as an important source of superior performance of the firm (Eisenhardt and Martin
2000; Grant 1996; Teece, Pisano and Shuen 1997). Finally, the assets-processes-performance
perspective seeks to integrate both resource- and processes-centered approaches into a tri-partite
model where sources of competitive performance of the firm are thought to spring from an
interaction of firm’s tangible and intangible assets and firm’s dynamic capabilities to use them
effectively (Ambastha and Momaya 2004; Buckley 1998; Martin 2003). Figure 4 presents the
integrative “assets-processes-performance” model of firm-level competitiveness. The model
stresses the interaction between firms’ assets and management processes and suggests that both sets
of factors are critical for competitive performance of the firm on home and foreign markets.
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Figure 4.
“Assets-processes-performance” model of competitiveness
Competitive assets
Competitive firm-level
performance
Competitiveness processes
In addition, management theorists, dissatisfied with standard economic model of competitiveness
(as shown in Figure 3), have offered more complex frameworks of competitiveness at national
level. These frameworks underscored the significance of not only factor endowments or competitive
assets internal to the firm but also stressed the role of environment in which the firm is embedded
(Porter 1989, 1990, 1998, 2000, 2003; Siggel 2006). One of the most popular approaches in the
management literature to explaining competitive performance of the firm, region, and nation is
Porter’s diamond framework (Porter 1990, 1998). Porter’s “diamond” framework specifies a cluster
of four interrelated conditions that determine competitive performance of the firm and, by
extension, industry and country. Factor conditions comprise human resources, physical resources,
knowledge resources, financial capital and infrastructure that the firm can get hold of. Demand
conditions refer to both the size of the home demand and the nature of the demand, i.e., the extent
of the sophistication of home customers with regard to product and/or service quality to which the
firm seeks to respond. Related and supporting industries aka “external economy” or “localized
clusters” involve the network of specialized suppliers and local institutions that influence the firm
and produce spill-over effects in terms of learning, innovation, and productivity. Finally, firm
strategy, structure, and rivalry include national competitors within a given business sector that
affect firms structure and strategy and force the firm to be cost-efficient, innovative, and quality
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oriented. All four conditions interact and jointly affect the level of competitive performance of the
industry, region, and nation (Porter 1990, 1998). Figure 5 presents that model.
Figure 5.
“Diamond” model of competitiveness
Related and
supporting
industries
Factor
condition
Demand
conditions
Firm strategy,
structure, and
rivalry
The “assets-processes-performance” model and Porter’s “diamond” framework could be integrated
into a single, integrative, framework by distinguishing between the individual firm and its
environment. The integrated framework of competitiveness of the firm makes it clear that the
individual firms are embedded within their respective industries, home economic markets, political
and social institutions, and local culture, which all influence the individual firm performance. At the
same time, the firm has a specific mix up of competitive resources and management capacities that
also determine its competitive performance. Therefore, the firm’s success depends on a complex
interplay of both internal capacities and external (i.e., environmental) conditions. Figure 6 lays out
that integrated framework.
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Figure 6.
Integrative conceptual framework of firm-level competitiveness
Firm’s environment
Related and
supporting
industries
(legal and political
institutions and
infrastructure)
Factor conditions
Demand conditions
(customers on home
and foreign markets)
Individual firm
Competitive assets
(labor and capital
market, geography and
climate)
Competitive
performance
of the firm
Competitive
processes
Firms’ rivalry
(competitive pressure
from other producers:
SME and LE)
This broad framework can be applied to the analysis of competitiveness of producers of local and
regional food on home markets in the South Baltic regions at individual firm, industry’s sector, the
entire industry, country and cross-country regional levels. In either case, it would require collecting
data at different levels of aggregation on six independent macro-variables (i.e., all solid boxes on
the left hand side) and one dependent macro-variable (i.e., the solid box on the right hand side). The
central box which currently refers to the individual firm can be also occupied by another functional
unit (e.g., the industry’s sector or the entire industry) or geographical unit (i.e., region or country or
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macro-region). This report is concerned with the analysis of sources of competitiveness and
competitive performance of producers of local and regional food on home markets in food industry
in four regions that are adjusted to the South Baltic Sea and encompass four different countries, i.e.,
Denmark, Germany, Lithuania, and Sweden. Therefore, the relevant unit of analysis is a sub-sector
of local and regional food within in a food sector on home market of the relevant region within each
of the four countries. For each of these for units, the analyst would need to compile comparably
measured data about four major environmental conditions (i.e., factor conditions, demand
conditions, related and supporting industries, and firms’ rivalry), two internal conditions (i.e.,
producers of local and regional food modal competitive assets and modal competitiveness
processes), and one sub-sector level competitive performance (i.e., producers of local and regional
food modal level of economic efficiency and customers evaluation of the value of their products
and services).
2.3 Value chain analysis of production of local and regional food
Any analysis of sources of competitive analysis is incomplete without a “value chain” analysis of
the firm (Porter 1985; Rowe et al. 1994).
Porter’s value chain concept
Definitions of “value chain”: The value chain refers to “the full range of activities, which are
required to bring a product or service from conception, through the different phases of production,
delivery to final consumers, and final disposal after use” (Kaplinsky and Morris 2001, 4).
Figure 7
The value chain for the production of local and regional food
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Producer of local and regional food
Chemicals
supplier
Machinery
supplier
Regulatory
agencies
(EU & local
authorities)
Design and
development of local
food products
Inbound logistics
(identifying suppliers,
and collecting inputs)
Production of local
food (i.e., growing
crops and raising
cattle)
Seeds &
cattle
supplier
Logistics &
transport
Outbound logistics
(collecting, storing and
distributing outputs)
and collecting inputs)
Marketing and sales
Retail
buyers
Wholesale
buyers
(specialized
shops &
restaurants
(supermarkets
& institutions)
Consumption
(farmers’ stands and
markets)
Recycling
Legend
Square boxes
Primary activities of the food firm
Rounded boxes
Major actors that influence the food firm
Functional lines of activities of the firm
Inputs provision by major business actors
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REFERNCES
Kaplinsky, Raphael, and Mike Morris. 2001. A Handbook for Value Chain Research. Available at:
http://www.globalvaluechains.org/docs/VchNov01.pdf. Accessed on 18 November
2013.
Porter, Michael E. 1985. Competitive Advantage: Creating and Sustaining Superior Performance.
New York: Free Press.
Rowe, Alan J., Richard O. Mason, Karl E. Dickel, Richard B. Mann, and Robert J. Mockler. 1994.
Strategic Management: A Methodological Approach. 4th edition. Mass.: AddisonWesley Publishing.
CHAPTER 3. CONCEPTUALIZING AND MEASURING STUDY VARIABLES
Social scientists have developed different approaches to conceptual analysis of important social
science concepts: syntactic-statistical, semantic-paradigmatic, and formal modeling (Brady, Collier,
and Box-Steffensmeier 2009; Goertz 2006; Gerring 2001, 2012). In this report, we apply the
semantic-paradigmatic approach that involves performing of two analytical tasks, i.e.,
conceptualization and measurement. Conceptualization deals with the formulation of “a
systematized concept through reasoning about background concept” (Adcock and Collier 2001,
531). In turn, measurement consists of operationalization and scoring of cases. Operationalization is
concerned with the “development, on the basis of a systematized concept, of one or several
indicators for classifying cases” while scoring is related to the “application of these indicators to
produce scores for cases being analyzed (Adcock and Collier 2001, 531). Drawing on
methodological literature on concept formation and typology development (Adcock and Collier
2001; Bailey 1994; Collier and Mahon 1993; Collier, LaPorte, and Seawright 2012; Goertz 2006),
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this section offers a systematic discussion of conceptualization and measurement of the
“competitive performance of producers of local and regional food”.
3.1 Conceptualizing and measuring the outcome variable
Recent economic and management literature on competitiveness discusses
“competitive
performance” from traditional (economic) and modern (social) perspectives. The traditional
perspective draws insight from the classical economic concept of “comparative advantage”
(Ricardo) and focuses on a dimension of competitive performance that refers to economic costs of
products and services (Chaudhuri and Ray 1997; Coy 2006). It may be designated as an “economic
productivity” dimension. Efficiency, net profit margin, return on investment, and market share are
some of its most common measures (Collignon 2012; Durand and Giorno 1990; Riley 2012). The
modern approach to competitive performance provides a more comprehensive interpretation of
competitiveness and borrows from business administration discipline, which considers innovation,
technology, and management practices to be relevant components of competitive advantage. Thus,
the second dimension of competitive performance can be dubbed a “product and/or service value
for the customer” dimension. Measures of that dimension complement the set of quantitative, cost
and price-based, measures with qualitative ones and include brand reputation, customer loyalty, and
unique product value (Chaudhuri and Ray 1997; Riley 2012). Table 2 presents the matrix that
relates background concepts, the systematized concept of “competitiveness of producers of local
and regional food”, its dimensions and measures.
Table 2.
Conceptualization and measurement of “competitive performance of producers of
local and regional food”
Background
concepts
Advantage, comparative advantage, and product value
Systematized
concept
Competitive performance of producers of local and regional food in the food sector is
defined as those advantages, i.e., higher economic productivity and/or higher product
and/or service value for the customer, that enable producers of local and regional food to
outperform their competitors, i.e., global industrial food producers.
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Economic productivity
Dimensions
Measures
Efficiency
Net profit
margin
Return on
investment
Product and/or service value for
the customer
Market
share
Brand
reputation
Customer
loyalty
Unique
selling
point
Quality
of
product
and
customer
service
Background concepts define semantic field within which the concept of “competitiveness of
producers of local and regional food” is embedded. They comprise ideas of advantage, comparative
advantage, and product value. The systematized concept or formal definition of the concept refers
to those advantages, i.e., higher economic productivity and/or higher product and/or service value
for the customer that enable producers of local and regional food to outperform their competitors,
i.e., global industrial food producers. The two dimensions of the competitive performance include
economic productivity of producers of local and regional food and perceived customers’ value of
local and regional food products and/or services. Each of these dimensions contains separate
indicators or measures. Economic productivity of producers of local and regional food could be
measured by efficiency per unit, net profit margin, return on capital, and the size of the market
share. In turn, value of local and regional food products and/or services for customers can be
assessed in terms of customers’ loyalty, quality and uniqueness of food products in relation to their
cultural identity and environmental sustainability. The first set of measures could be converted into
monetary terms and is amenable for comparison while the second one calls for a qualitative
evaluation and presents a formidable challenge for an inter-subjective comparison across regions.
A separate question concerns the type of a theoretical structure of the concept of
competitive performance, which, as many other important social science concepts, is a multi-level
and multi-dimensional concept. To explicate meaning of such a complex concept, the analyst needs
23
Anton Petrenko, concept paper draft 3, 20 January 2014
to expose the theoretical structure of the concept. In order words, it is necessary to clearly articulate
the type of the formal relationship between levels and between dimensions of a given concept.
Methodologists, working from mainly a realist approach to concepts, typically distinguish between
three types of relations between basic-level and secondary-level conceptual variables: causal,
ontological, and substitutability (Goertz 2006, 54). A causal relationship between conceptual levels
implies that secondary-level conceptual variables act as causes of a basic-level variable. In
ontological relationship, secondary-level concepts represent the features or elements that constitute
or compose the basic-level concepts. Finally, in a substitutable relationship, each secondary-level
variable is a substitutable means to a given basic-level variable (Goertz and Mahoney 2006, 242244). Based on the preceding theoretical discussion, the concept of competitiveness can be also
construed as having a two-level (i.e., basic and secondary) and two-dimensional structure. The
analysis of the concept of competitiveness suggests that its basic- and secondary level concepts are
linked through the ontological relationship.
As to the task of establishing the type of the relationship within conceptual levels or
between conceptual dimensions of the concepts, social scientists routinely rely on two different
structural principles for constructing multi-dimensional concepts: the structure of necessary and
sufficient conditions and family resemblance structure (Collier and Mahon 1993; Goertz 2006). The
necessary and sufficiency principle, commonly employed in classic philosophical logic, considers a
basic-level concept to be composed, at the secondary level, by a set of individually necessary and
jointly sufficient conditions that are linked together through logical AND. By contrast, family
resemblance concept structure implies that the basic-level concept consists at the secondary level of
a set of concepts that are not individually necessary but sufficient and are connected via logical OR
(Goertz 2006, 7). The relationship between the two dimensions of the concept of competitive
performance fits most closely the family resemblance structure. Figure 7 depicts the theoretical
structure of the concept of competitive performance.
Figure 7.
Conceptual structure of “competitive performance”
Basic level
Competitive performance
24
Anton Petrenko, concept paper draft 3, 20 January 2014
Product and/or service
value for the customer
Economic productivity
Secondary level
+
Dimension 1
Dimension 2
Legend:
Ontological
+
OR
The proposed conceptualization of “competitive performance of producers of local and regional
food” on two theoretical dimensions permits construction of a more general descriptive typology of
“competitive performance of food producers”. This conceptual typology may be useful for both
identifying ideal types of competitive performance of food producers, situating different categories
of food producers, and assessing empirical cases against theoretically identified prototypes. Figure
8 lays out that conceptual typology by cross-tabulating two dimensions, i.e., economic productivity
and product/service value, and measuring them qualitatively on a scale from low to high.
Figure 8.
Descriptive typology of “competitive performance”
High
A. Non-efficient
& high quality
B. Efficient
& high quality
C. Non-efficient
& low quality
D. Efficient
& low quality
Product and/or service value
for the customer
Low
High
Low
Economic productivity
25
Anton Petrenko, concept paper draft 3, 20 January 2014
Figure 8 identifies four ideal types of competitive performance of producers within conceptual
property space created by two theoretical dimensions: Type A. Non-efficient & high quality
producer; Type B. Efficient & high quality producer; Type C. Non-efficient & low quality
producer; and Type D. Efficient & low quality producer.
The descriptive typology of competitive performance permits development of
hypotheses in relation to different types of food producers. It may be asserted that producers of
local and regional food would belong to ideal type A, i.e., producers that produce or serve food
products of high value at a high cost, while global industrial food producers would largely (but not
exclusively) fall within type D, i.e., producers of highly efficient but of low quality food products.
Figure 9 presents the hypothesis and illustrates that logic.
Figure 9.
Hypotheses about different types of food producers
High
Local and regional food
producers in the South
Baltic region
(i.e., DK, G, LT, and SE)
Product and/or service
value for the customer
Global industrial food
producers
Low
Low
High
Economic productivity
26
Anton Petrenko, concept paper draft 3, 20 January 2014
In Chapter 4, the empirical pattern in the data (i.e., production of local and regional food in four
Baltic Sea adjustment regions in Denmark, Germany, Lithuania, and Sweden) will be evaluated via
pattern matching against theoretically derived pattern (i.e., ideal types of competitive performance
of food producers) and offer a preliminary test of the hypothesis that producers of local and regional
food in the South Baltic region belong to ideal type A, i.e., non-efficient but high quality food
producers.
3.2 Conceptualizing and measuring the independent study variables
To develop meaningful propositions about whether and how internal and environmental conditions
influence competitive performance of producers of local and regional food, it is also necessary to
further conceptualize and operationalize key independent variables. The conceptual framework of
competitiveness (Figure 6) comprises total of six explanatory variables, i.e., “demand conditions”,
“factor conditions”, “related and supporting industries”, “firms’ rivalry”, “competitive assets” and
“competitiveness processes”. All these concepts are applied at the level of the sub-sector of local
and regional food within the food industry. This section attempts to clarify the meaning and
conceptual structure of these explanatory variables.
The first internal determinant of competitive performance at the sub-sector of local and regional
food level is an aggregate concept of “competitive assets” of producers of local and regional food
as a collective actor. Economic and management theorists of competitiveness have long debated
relevant features of the concept of “competitive assets” and discussed this concept under different
conceptual labels and at different levels. Nonetheless, both economic and management theorists
seem to agree to include under that concept actual resources that the industry can get hold of (i.e.,
human resources, financial capital, knowledge resources, and technology) and the external scale of
production. Drawing on these insights, Figure 10 formulates the conceptual structure of the concept
of “competitive assets” at basic, secondary, and tertiary levels.
Figure 10:
Basic level
Conceptual structure of “competitive assets” from economic perspective
Competitive assets of
the producer of local
and regional food
27
Anton Petrenko, concept paper draft 3, 20 January 2014
Secondary level
Tangible and
intangible resources
+
External scale of
production
Tertiary level
Physical
resources
+
Human
resources
+
Financial
capital
+
*
Technology and
infrastructure
Legend:
Ontological
+
OR
Figure 10 shows that the
theoretically constructed concept of “competitive assets of producers of local and regional food”
has a multi-level and multi-dimensional structure. At the secondary level, the concept consists of
two dimensions: tangible and intangible resources and external economy of scale. At the tertiary
level, tangible and intangible resources include actually utilized physical and human resources,
accumulated financial capital, employed technology and existing infrastructure. The concept has a
family resemblance structure at both secondary and tertiary levels.
The second internal determinant of competitive performance of the firm is the firm’s
competitiveness processes.
Figure 11:
Basic level
Conceptual structure of “competitiveness processes”
Competitiveness
processes
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Anton Petrenko, concept paper draft 3, 20 January 2014
Secondary
Marketing
level
+
Innovativeness
+
Strategic
management
+
Partnership
building
Legend:
Ontological
+
OR
To be continued….
3.1 Hypotheses
In this report, the explanatory and descriptive typologies of competitiveness of the firm will be
applied as diagnostic tools in order to assess the level of competitiveness of producers of local and
regional food in four empirical cases, i.e., Denmark, Germany, Lithuania, and Sweden. Such an
assessment has theoretical and practical value. Theoretically, it contributes to middle-range theory
building of competitiveness of producers of local and regional food at regional level. Practically, it
may assist in the development of relevant interventions seeking to enhance current levels of
competitiveness of food producers in the South Baltic region. Finally, didactically, results of that
evaluation may be used in educational process.
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Anton Petrenko, concept paper draft 3, 20 January 2014
Hypothesis 1: Competitiveness of producers of local and regional food consists of their ability to
produce high product and service value for the customers even though the cost of
production is high.
Hypothesis 2: Competitiveness of producers of local and regional food originates from their
superior management of competitiveness processes despite relative shortage of
competitive assets, e.g., diseconomy of scale.
CHAPTER 4. DATA ANALYSIS
4.1 Small-N comparative analysis (Anton Petrenko)
Environmental causal conditions
Internal causal conditions
Outcome conditions
Cases
Factor
conditions
Demand
conditions
Support
industries
Firm’s
rivalry
Competitive
assets
Competitive
processes
Competitive
performance
– economic
productivity
Competitive
performance
–value for
customers
1
1
0
1
1
0
0
1
Denmark
1
1
1
1
1
0
0
1
Sweden
1
1
1
1
1
0
0
1
Germany
1
1
0
1
1
0
0
1
Lithuania
Source: Annex B, 0 = condition is absent; 1 = condition is present
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Anton Petrenko, concept paper draft 3, 20 January 2014
4.2
SWOT analysis of local and regional food production in the South Baltic region
Strengths-Weaknesses-Opportunities-Threats (SWOT) matrix is an important business tool that is
routinely applied by managers for the purpose of situational analysis and strategy planning (David
2009; Thompson, Strickland, and Gamble 2010; Weihrich 1982). SWOT enables analyzing and
developing business strategies for a company in an industry or a segment of industry, based on the
analysis of company’s external environmental conditions and its internal characteristics).
Table 3 presents a SWOT matrix for an average local and regional food producer in
the four South Baltic regions (i.e., Zealand in Denmark, Skåne, Blekinge and Gotland in Sweden,
Mecklenburg and Vorpomerania in Germany, and Lithuania). It draws on information that was
assembled and discussed in four national papers by the Regfood project partners.
Table 3
Generic SWOT matrix
The Internal Assessment
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Anton Petrenko, concept paper draft 3, 20 January 2014
Strengths (S)
Weaknesses (W)
1. High quality of local and regional food
products
2. Uniqueness of local and regional food
products
3. Identity and traceability of local and
regional food products
4. Good reputation with customers
5. Ethical values (e.g., sustainability)
1.
2.
3.
4.
5.
6.
7.
8.
High costs of the unit of production
Diseconomy of scale
Logistics
Marketing
Human resources
Product development
Technology
Management
The External Assessment
Opportunities (O)
1. Niche market for local and regional food
products
2. Growing customers’ demand for local
and regional food
3. Technological innovation for direct sales
Threats (T)
1. Limited access to financial capital
2. Seasonality of business
3. Complex regulations at national and EU
levels
4. Low attractiveness of the industry for
young, talented, and skilled labor force
5. Environmental degradation and climate
change
4.4 TOWS analysis
Table 4 displays four basic TOWS strategies that O strategies seek to match firm’s internal
strengths with external opportunities so that the firm can acquire a competitive advantage over its
main competitors. In turn, WO strategies aim at overcoming a firm’s internal weaknesses by taking
advantage of external opportunities. By contrast, ST and WT strategies attempt to avoid the
detrimental impact of external threats on their business by either capitalizing on firm’s
organizational strengths or reducing its weaknesses, respectively.
Table 4
Developing business strategies from SWOT matrix
External environmental conditions
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Anton Petrenko, concept paper draft 3, 20 January 2014
Strengths
(S)
Opportunities (O)
Threats (T)
SO strategies
ST strategies
Market penetration, i.e., seeking
increased market share for present
local and regional food products and
services in present food markets
through greater marketing efforts on
home food market.
Horizontal integration, i.e., seeking
increased communication with
regulators and improved access to
financial capital through synergy
and strategic partnerships.
Market development, i.e., introducing
present local and regional food
products into new geographic areas
through greater marketing efforts on
foreign food markets, e.g., EU and
globally.
Internal
organizational
and/or
industry
conditions
Product development and
differentiation, i.e., seeking increased
sales by improving present local and
regional products and services or
developing new ones through
research & development.
WO strategies
Weaknesses
(W)
Vertical forward integration, i.e.,
seeking increased control over
distributors and retailers through
strategic partnerships.
WT strategies
Retrenchment, i.e., regrouping
through assets and cost reduction of
local and regional food to reverse
declining profits.
Vertical backward integration, i.e.,
seeking increased control of a firm’s
suppliers through strategic
partnerships.
Horizontal integration, i.e., seeking
increased control over a firm’s
competitors through synergy and
strategic partnerships.
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Anton Petrenko, concept paper draft 3, 20 January 2014
Table 5
Typology of generic business strategies
Product cost position
Low
High
Unique product quality
Unique product quality
Low
(1)
Low-cost
strategy
High (e.g., bulk food
production)
High
Low
High
(2)
(3)
(4)
Best-cost broad
differentiation
strategy –
Marketing 1 (e.g.,
market penetration
for local and
regional food)
N/A
High-cost broad
differentiation
strategy –
Marketing 2 (e.g.,
market
development for
local and regional
food)
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Anton Petrenko, concept paper draft 3, 20 January 2014
(5)
Scope of the
target market
Low Low-cost
focused
strategy Partnership 1
(e.g., vertical
integration of
value chain of
local and
regional food)
(6)
(7)
(8)
Best-cost focused
differentiation
strategy –
Marketing &
Partnership 2
(e.g., horizontal
integration of
producers of local
and regional food)
N/A
High-cost focused
differentiation
strategy –
Research &
development (e.g.,
local and regional
product
development)
Attracting skilled
labor
Attracting skilled
labor
Source: This is an author-developed typology based on discussion of a three-generic strategy classification by Porter
(1980, 35-40) and of a five-generic strategy by Thompson, Strickland, and Gamble (2010, 140).
REFERENCES
David, Fred. R. 2009. Strategic Management: Concepts and Cases. Prentice Hall.
Porter, Michael E. 1980. Competitive Strategy: Techniques for Analyzing Industries and
Competitors. New York: Free Press.
____ 1985. Competitive Advantage: Creating and Sustaining a Superior Performance. New York:
Free Press.
____ 1990. The Competitive Advantage of Nations. New York: Free Press.
Thompson, Arthur A., A. J. Strickland III, and John E. Gamble. 2010. Crafting and Executing
Strategy. The Quest for Competitive Advantage. Concepts and Cases. Boston:
McGraw Hill.
Weihrich, Heinz. 1982. “The TOWS Matrix: A Tool for Situational Analysis.” Long Range
Planning 15 (2): 54-66.
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Anton Petrenko, concept paper draft 3, 20 January 2014
4.2 Narrative analysis - The role of partnership building and networking (Philipp)
Nowadays, the general food sector is a global market, which is dominated by huge enterprises.
However, the food companies in the South Baltic region are in most instances microenterprises and
small enterprises (e.g., only 50 food-firms with more than 100 employees are located in
Mecklenburg-Vorpommern/Germany). These small food producers are important mainstays of the
regional economy, but they are confronted with diseconomies of scale like:
1. Barriers to entry into markets
2. Comparatively low capital adequacy
3. Fewer chances for economies of scale
4. Restricted market area
As the following sections will illustrate, a regional value added partnership could compensate the
diseconomies of scale of the microenterprises and small enterprises in the Regfood area.
4.2.1 Barriers to entry into markets
Partnership and network building (PNB) could open up new markets for regional foods and
increasing the bargaining power of the producer (e.g. regarding retail business). There were several
statements from interviewees, which showed that a PNB could be favorable for regional food
36
Anton Petrenko, concept paper draft 3, 20 January 2014
sector. Regional food producers from Lithuania mentioned that “in market place there are mostly
production from small family farms – there is impossible to provide their production to supermarket
because farms are unable to ensure a steady and adequate supply”; furthermore “the production is
made in small amount, thus producer are not able to sell it on the market and small producers face
many disturbances to expand their business”. The Lithuanian Regfood-report arrives at the
conclusion that the food industry and retail chains are very concentrated, that is why consumers and
small producer have less power to assert their particular interests. One producer both in Sweden and
in Denmark stated that it was difficult to negotiate with big retail-companies. One interviewee from
Germany noted that it would be difficult to create a new business market.
4.2.2 Comparatively low capital adequacy
Low capital adequacy seemed to be a problem for throughout almost all regional food producers.
Interviewees from all countries mentioned some kinds of financial shortage. In MecklenburgVorpommern/Germany 5 out of 6 interview food producer as well as 2 of 3 caterers wished some
financial support. Similar responses were given in Sweden. 3 of 5 interviewees answered that they
would need financial support as assistance for further develop of their local food business. 1 of 3
caterers mentioned the same problem. In Denmark the food producer “have a challenge of getting
financial support” and in Lithuania “the financial resources of the farms for modernization or
processing of agricultural production, value-added increase is insufficient.”
PNB has more potential for financial support then a single company. The application
procedure for founding is often very time-consuming for microenterprises and small enterprises.
Furthermore, a lot of the regional development programs are unknown or private companies aren`t
eligible. PNB can organize political support and provide management provision in regard to
application procedure.
4.2.3 Fewer chance for economies of scale
The food companies in the Regfood region are mostly microenterprises and small enterprises. These
companies have fewer chances for economics of scale and the resulting advantages. For regional
37
Anton Petrenko, concept paper draft 3, 20 January 2014
food producer a functioning network between all participants of a regional value food chain could
compensate to a certain extent the diseconomies of scale. Some examples for synergies are:

Sharing of resource or capital-intensive goods (e.g., in Sweden: A better part of caterer`s
canteen kitchen is not used)

Sharing costs e.g., for consultants (e.g., in Denmark: a caterer would like to focus more on
sustainability but an expert is too expensive)

Learning from each other (in all countries the interviewees said that product development
and a lack of innovations are problems for regional food producer)

Incorporate food science facility to a potential value added partnership (in all countries the
interviewees said that product development and a lack of innovations are problems for
regional food producer)

Incorporate local administration (a few interviewees said that they are facing problems with
the administration)
4.2.4 Partnership and network building
Many interviewees (1 of 3 caterers in Denmark; 1 of 5 food producers and 2 of 3 caterer from
Sweden; 2 of 6 food producers from Mecklenburg Vorpomerania/Germany) would like to increase
the networking. A starting point might be the existing regional network. In Mecklenburg
Vorpomerania/Germany there are 5 common labels and 8 initiatives to promote regional foods. In
Denmark there are at least 8 initiatives which care about regional food; in Sweden and Lithuania are
mentioned less in the national reports. The collaboration in these existing regional networks could
be increased and could be developed to a RVP by the Regfood project.
4.2.5 The added value stays in the region
In Denmark two interviewees said that the main thread for their business would be an increasing
impoverishment. Interviewees In Germany the interviewees said that due the high unemployment
rate it would be hard to sell –mostly more expensive - products to locals. Interviewees in Sweden
have expressed similar positions. If the added value stays in the region it could create jobs and
increase the earning which might increase the selling of regional foods. The Lithuanian paper
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Anton Petrenko, concept paper draft 3, 20 January 2014
mentions “with increasing incomes and changing consumer priorities in the field of nutrition,
Lithuania have a preference for organic, high-quality and exceptional products - it is likely that
consumption of these products will increase.”
4.2.6 Authenticity of their products
The main strength of the regional food producer is the authenticity of their products. Almost all
interviewees mentioned the special quality of their foods. If the whole value added chain stays in
the region the trust of the consumer in the products is increased. Compared to an anonymous
industrial food product the regional foods literally get a face (This is the product of farmer xy). A
RVP attracts more interest and the RVP can organize a broader communication and noticeable
marketing activities. The national Regfood-reports show that lack of marketing-knowledge is one of
the most desired capabilities by the interviewees:

Germany:
o 1 of 3 caterers “said that they need more knowledge in marketing as well as
advertisement to promote their local food business.”
o 4 of 6 food producer “would want to obtain marketing expertise. Foremost it was
said that they would need some help with marketing their products, like to get some
hints concerning product design and advertisement. Marketing may help the food
processing firms to adopt new logistical approaches. One interviewed person even
mentioned the wish to get some marketing expertise for exporting its products in the
north Baltic region”

Denmark:
o “The sea-food restaurants with fish dealing mention that network and education is
very important for the development of the business. The conference hotel said, that
marketing always could be developed, although it goes very well now. They hold
sponsor dinners in order / in hope to get appointment with the participants later.”
o “The staff restaurant says that marketing could be approved. We could mention / hat
we are able to make arrangements for the local authority and organizations. Making
appointments with the private market is not possible because it will be distortion of
competition.”
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Anton Petrenko, concept paper draft 3, 20 January 2014
o “Marketing, hygiene and legislation are mentioned of two producers.”

Sweden:
o Marketing: to reach more parts of Sweden
Other
There are more advantages for RVP, but these were not mentioned in the reports by the
interviewees:

might reduce the transport and therefore CO²

could preserve traditional craft based food productions,

can save the culinary heritage of the Regfood region
4.3 Narrative analysis - The role of marketing
4.3.1 Retail
Although a large share of the local and regional produce is marketed at different types of farmers
markets and farm shops in the REG-Food region, ordinary supermarkets are the main source for
local and regional food (LRF). The supermarket thus represents an important marketing channel for
LRF. In Lithuania for example, three main supermarket chains (Maxima, Iki, Rimi) in their
supermarkets has separate sections, dedicated to organic or local food products, supplied by farmers
and family farms.
Forsberg (2009) found that supermarkets sell local foods in order to supply a wide
range of products and to mediate social responsibility to create customer loyalty. Concerning how
the supermarkets try to market LRF the study does not give a clear-cut view. A supermarket that
actively works to influence customers to buy local food market this type of food while the opposite
applies for a grocery that has less interest in promoting LRF (Forsberg, 2009). It will be interstiong
to follow how the retail concept ”Smaka på skåne -Närproducerat och noga utvalt” – that can be
translated into ”Taste Skåne - produced nearby and chosen with care” that was launched in Skåne a
coupe of year ago is evaluated. The aim this concept is to facilitate for both consumers and
producers of LRF to find the produce in food stores in Skåne and int can thus be seen as amarketing
40
Anton Petrenko, concept paper draft 3, 20 January 2014
initiative. The criteria for labeling the products include regulations on geographic origin of
production and processing and documentation of this (the Skåne Food Innovation network, 2012).
Unprocessed products shall be cultivated/caught/raised in Skåne. For processed products, the
dominant
or
characteristic
ingredient
should
be
produced
in
Skåne.
Further,
the
processing/production shall be carried out in Skåne and carried out in a artisanal manner. The
concept is primarily used for products that originate from small and middle scale food companies
according to the EU definition of SME:s.
One Danish example gives an indication of the power in displaying the local and
regional produce in an integrated and convenient way. One primary producer mentions a wish to
create a supermarket at the farm with meat from their own slaughter, own milk products and cheese,
vegetables, meal from the own mill and marmalade from the own factory. Further, plans of
producing their own honey and to build a process kitchen, shows the power in marketing the
produce in an efficient way. However, as seen in Lithuania there are today a variety of market
channels for LRF, such as marketed directly from the farm shops, farmers' markets and through the
Internet, using the developed supply schemes.
4.3.2 Local food services
One representative of a local food service in denmark indicates that “marketing always can be
developed” and this can to some extent summarise a common view on marketing ampong the
investigated local food service establishments in the Regfood region. Marketing should naturally
be tailored to taget groups.
One of the caterers of local food in Sweden has somewhat unconventional view of
marketing by seeing the supermarket and what they supply as a display window for marketing of
local food creating a higher interest and understanding of what is served on the menu. “Better
visibility of local products at retail which will reflect on higher interest for restaurant consumers as
a result of better product knowledge”. In Germany one local food service establishment/caterer
called for better knowledge in marketing as well as advertisement to promote their local food
business. Articles/programs to promote LRF gastronomy are for example released on radio or
published in newspapers specially designed for tourists. One way to create a new business market
could be to cooperate with hotels or youth hostels, but according to the German respondent this was
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Anton Petrenko, concept paper draft 3, 20 January 2014
not so easily done. Besides getting something to drink and eat, the customers get an insight into the
food processing business.
Another suggestion for marketing LRF menus and to serve more local/regional
products from in Mecklenburg-Vorpommern was the development of a data file (product data base).
In this file, potential consumers, producers and restaurant businesses are to be linked. The producers
can state what and when their products are offered and the consumers as well as the restaurant
businesses can find out which products can be purchased when and where. One of the German food
service establishments stated that “Trying to have the fingers on the pulse of time - creating new
offers and thus to obtain a better positioning on the market” may be a weakness of the local food
business”.
In Lithuania, in 2012 network of Lithuanian Responsible Restaurants and Suppliers
(LRRS) was created. LRRS is open responsibility declaring Lithuanian restaurants and suppliers
network. LRRS members assume voluntary commitments related to sustainable use of raw
materials in the restaurant, quality and environmental policy, communication and cooperation with
the public. The network owned restaurants visitors can get all the information about the restaurant /
café use products, their ingredients, allergens, GMO use, origin, method of preparation. Also they
can find information on all environmental policies and actions taken concerning this issue.
4.3.3 Local food producers
The local food producer is probably the person that knows the product best and the direct contact
between producers and consumers has many dimensions, from social to pedagogical. In Lithuania it
is described how farmers are proud of, and with a philosophical interest look at the eco-friendly
products and are often themselves involved in the processing and marketing of their grown organic
produce. This usually means that the farmers can directly tell the customers about the products they
buy, as well as familiarize consumers about how the food they buy was produced and the benefits
of sustainable food production. This is how awareness among consumers is increasing and helps to
choose which food and drink consume.
One less direct way of marketing is branding and as reported from Denmark a trend is
seen regarding local branding within different product groups, seen among other within rape seed
oil production. In Lithuania form example, the main type of labeling of local food is writing on the
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Anton Petrenko, concept paper draft 3, 20 January 2014
label that the product is produced locally, indicating the area where the food was produced and the
name of the owner (sometimes with contact details). Mostly there is logo “has been produced
(made) in Lithuania”, sometime with the exact geographical indication on the packaging of product.
Interestingly, in Lithuania there are also trademarks with tradition and historicity link which can be
found in large markets and on local producer’s production labels as well. According the national
register, there are 5
However, marketing of LRF does not seem to be a major issue for local food
producers in Denmark, only one respondent expressed an interest in developing marketing
competence. One of the Swedish food producers expressed a need for better marketing skills in
order to reach more parts of Sweden. Another producer notes that a representation of different
generations in the company broadens the network and marketing possibilities. Small-scale Swedish
producers highlight the strength of having several operations, as for example combining food
production with cultural experiences and tourism. This is in a way represents a means to market the
produce. In Germany, Mecklenburg-Vorpommern, marketing expertise was after sought by the
interviewed food producers. Foremost it was said that they would need some help with marketing
their products, like to get some hints concerning product design and advertisement. Marketing may
help the food processing firms to adopt new logistical approaches. One interviewed person even
mentioned the wish to get some marketing expertise for exporting its products in the north Baltic
region. One producer indicated that “No experience in marketing and advertisement” was a
weakness for the local food business in question. Another interesting angle was put forward in
interviewing German food producers: by using the term regional a new marketing concept can be
developed which are not only of interest for tourists but also for locals.
4.3.4 Consumers
How can LRF be efficiently marketed to consumers? According to the Swedish government (2005)
there is a large potential for small scale food producers to increase their profit as a result of the
demand of processed products, representing an added value in the form of the history behind the
making of the product and a clear origin, often with a local and/or regional connection to where it is
sold.
43
Anton Petrenko, concept paper draft 3, 20 January 2014
CHAPTER 5. CONCLUSION
5.1.
Intervention model
Figure 14:
Intervention model
Facilitating
partnership
Education
Figure .
Partnership
building
Marketing,
food safety,
knowledge of
legislation
Competitiveness of producers
of local and regional food on a
home market in the food
sector in the South Baltic
region
Expected effect of intervention strategies for increasing competitiveness of local and
regional food production
Economic productivity
44
Anton Petrenko, concept paper draft 3, 20 January 2014
Low
High
High
Local food
production
Product/service value
Global and bulk food
production
Low
Note:
Strategy of marketing
Strategy of partnership
Increasing competitiveness of LFP implies two business strategies: First strategy would focus on
countering diseconomies of scale (i.e., increasing economic productivity) through increased
networking and partnership; The second strategy would seek to increase levels of recognition and
appreciation of product value of local food products through better marketing.
Overall conclusion: Competitiveness of local and regional food production may be strongly
enhanced if partnership of producers of local and regional food with other producers, customers,
and authorities in the food sector was promoted. In addition, the SB food sector needs newly
educated and skilled workforce that is trained in SB local and regional food. Development of a
curricula and educational program on SB regional food is, therefore, a precondition for the
preparation of scores of food specialists competent in SB regional food. Overall, the investment in
SB local and regional food education has a strong potential for rendering regional education more
attractive, increasing job competences, and further developing new job and business opportunities,
thereby, promoting SB regional economies within and beyond the food sector.
45
Anton Petrenko, concept paper draft 3, 20 January 2014
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APPENDIX A. QUESTIONNAIRE FOR DATA COLLECTION
The questionnaire seeks to collect information from primary (i.e., interviews) and secondary (i.e., national
statistics) about:
a. Local food systems in partners’ regions in Germany, Denmark, Lithuania and Sweden.
b. Local food service in partners’ regions in Germany, Denmark, Lithuania and Sweden.
Regional analysis will also look in commonalities and differences across South Baltic
countries.
c. Local food producers’ perceptions of threats and opportunities to local food production
d. Local consumers’ perceptions of benefits of local food.
To facilitate the systematic and structured collection of data and material on the afore-mentioned points, the
common list of questions is provided below. Each country will provide an input (10 pages in English)
addressing each of the questions in turn.
Description of local food system
50
Anton Petrenko, concept paper draft 3, 20 January 2014
1. What is the average size (in hectares and animal heads) of the producer of primary local/regional
food (LRF) in your country?
2. What kinds of LRF are produced in your country/region (2011)?
3. How much LRF was produced (tons) in your country/region (2011)?
4. How many (%) food processing companies of small-size, mid-size and large-size are in your
country/region (2011)?
5. What are the main distribution channels?
6. What types of common labels and/or marketing systems (indicating that the food is locally
produced) do you have in your country/region?
7. What are trends (in last 5 years) in LRF production?
Local Food Service
1.
2.
3.
4.
How many (the number and %) restaurants serving LRF are in your country/region (2011)?
What are the benefits of serving of LRF for restaurants in your country/region?
What kind of meals made of LRF do you serve?
What are opportunities and challenges for serving LRF at your restaurant?
Local food producers’ perception of opportunities and barriers to local food production
51
Anton Petrenko, concept paper draft 3, 20 January 2014
To collect information about perceptions’ of local food producers in a systematic way a questionnaire could
be administered to 5-7 local food producers at personal meeting or by phone. Due to methodological
limitations (e.g., no representative sampling, no large number of respondents, no statistical analysis of data),
it is not possible to draw inferences or generalize from these data. However, this questionnaire could be used
as a qualitative tool to inform the design of the training course on local and regional food and ensure that it is
relevant to local food producers as well. The structure of the questionnaire is as follows:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
Name
Gender
Age
What type of local food do you produce?
What “local food” mean to you? How would you define it?
What is your definition of “regional food’?
How do your customers understand “local food”?
How did you decide to start a business on local food?
What kind of help did you get in developing your local food business?
What is a desired profile of an employee for your local food business?
Do you need assistance from a consultant to further develop your local food business?
What are the strengths of your local food business? Why?
What are the weaknesses of your local food business? Why?
What competencies/capacities would you want to develop yourself and for your company?
What are the opportunities for your local food business? Why?
What are the risk/threats for your local food business? Why?
How can a project like “Regfood” help you in your local food business?
Local food consumers’ perceptions
To get insight into the consumers’ perception about local food, the following research questions shall be
studied. Information for these questions could be obtained from published national surveys of public opinion.
1. Are you familiar with the concept of local food?
If yes: Where do you buy it (e.g., farmer’s shop, street market restaurant, grocery store,
supermarket, etc.)?
2. What do you associate with local food? (e.g., radius of 50 km, short distance, etc.)
3. What are the characteristics of local food?
4. What do you think of the quality of local food? (e.g., freshness, tastiness, traditional production, etc.)
5. How important is it to you to buy local food?
6. Has your attitude to local food changed over the last 5 years?
7. Are you willing to pay more for a local food product as compared with conventional food?
8. How much of your total budget goes to buying local food?
9. How much of your food budget goes to buying local food?
10. How much trust do you have in food which claims to be local?
11. Should there be special "labels" facilitating the identification of local food?
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Anton Petrenko, concept paper draft 3, 20 January 2014
ANNEX B Reduced data table
Denmark
(National level)
Sweden
(Skåne, Blekinge,
Gotland and
Småland)
Germany
(Mecklenburg –
Vorpomerania)
Lithuania
(National level)
Competitiveness of local food production (Y)
What is a share of
local and regional
food products on
home market in the
food sector?
Oatmeal 41%
milk
29%
egg
23%
oil
22%
wheat flower 20%
?
?
Milk
(24%),
livestock (20%),
grain
(20%),
industrial crops
(10%)
What is a share of
producers of local
and regional food in
the food sector?
About 400 farm
shops employing 049 persons
About 3.000
companies (0-20)
employees) in
Sweden. In Skåne,
there are 400
companies in food
sector.
165 food companies:
81 (20-49), 75 (50249), and 14 (more
then 250).
844 food and
beverage
manufacturing
companies
?
367 craft-based food
businesses.
2,730 catering
companies.
What is a share of
restaurants serving
local and regional
food in food service
sector?
Total 1131
restaurants. No data
about the number of
those that serve local
food.
What is a
comparative
advantage of your
local and regional
food business?
Quality, uniqueness,
ecological products,
traceability, identity
of products, qualified
staff, full cycle of
food production,
healthy, sustainably
produced, local
identity, support for
national economy
What are
disadvantages of
local and regional
food production?
High cost of
products, difficulty
of communicating
quality to customers,
logistical challenges
to serve small
number of
customers, seasonal
character of business
(short vacation
period, tourists),
6.500 enterprises in
hotel and restaurant
industry. 1.400 are
members of association
(DEHOGA-MV). Out
of this number, 938
enterprises serve LFP.
18 members in
national network of
restaurants(?)
Authentic unique
local products,
experience
gastronomy, history
of product,
flexibility, quality,
the whole process,
good reputation,
sustainable, social
values, direct
customers’ contacts.
Direct connection
between cultivation and
consumption, unique
products, healthy food,
high quality and variety
of products, experience
gastronomy,
networking, direct
marketing.
Fresh food, exquisite
cuisine, customers’
appreciation.
Capital availability,
low negotiation
leverage with big
companies, local
knowledge in the
family, overworking,
seasonality,
underused capacity.
Diseconomy of scale
(high costs for
development of new
products, purchasing
new technologies),
recruitment of skilled
workers, uncooperative
administration, no
experience in
marketing, odor
53
Anton Petrenko, concept paper draft 3, 20 January 2014
capital availability,
shortage of qualified
staff
What customers
associate with local
food?
Quality 70%, taste
57%, knowledge of
producer 33%,
proximity to home
31%,
environmentally
sustainable, healthy,
supporting local
economy.
What do you think
of the quality of
local food?
Freshness (76%),
taste (64%),
sustainability (20%),
and knowledge of
producer (22%).
Why is it important
to you to buy local
food?
Fresh food,
environmental
sustainability,
economic impact,
social contact with
producers, health
nuisance, seasonality.
Based on consumers’
values and beliefs,
shorter transport,
environmental
sustainability, impact
on local economy,
ethic animal
husbandry and high
product quality, high
price, and good taste.
Local origin, short
transport distance,
pollution control.
Local origin and
local raw products,
safe, healthy, fresh,
traditional,
ecological, tasty.
Traditional food, short
transport distance,
freshness.
Sustainability, health,
safety.
Fresh, tasty,
healthier.
To promote shorter
transport, the
environment, small
scale food
production and a
vital countryside,
food security, food
safety, ethical animal
husbandry.
Highly important for
30% and important for
27%.
94% important and
very important.
Networking,
education, marketing
Financial support,
marketing,
networking,
education,
process/product
development,
logistic and transport
solutions,
Financial support,
knowledge in
marketing and hygiene,
focus on customers,
service quality, product
database development,
management,
networking.
Is marketing of local
and regional food by
means of labeling is
currently used?
EU Geographical
indications DOP
(BOB in Danish)
labels, Culinary
heritage.
Culinary heritage.
Bio-Siegel,
Biospharenreservat, EU
Geographical
indications (DOP).
What marketing
initiatives facilitate
LFP in your
region/country?
State - Ministry of
Food, Agriculture
and Fisheries
(Madkulturen).
“Taste Skåne”,
“Sweden as the new
culinary nation”
Rugen Produkt, Unser
Norden, Unser Heimat
& Gut.
Partnership and networking (X1)
What factors
promote local and
regional food
production?
Marketing (X2)
“Euro-leaf”, written
statement about local
or national origin,
ecological label,
about 50 labels for
traditional food.
Private – Smagen af
Danmark, Slow food,
54
Anton Petrenko, concept paper draft 3, 20 January 2014
spis lokalt, smag på
landskabet, farmers
market.
Should there be
special "labels"
facilitating the
identification of
local food?
Labels
communicating
locality (origin) have
competitive
advantage.
What are the
opportunities for
your local and
regional food
production?
Extending services
(e.g. catering) and
product
development, to
minimize waste,
increase
sustainability
(energy, waste
management),
developing products
that large producers
cannot produce.
How much
customers are
currently aware of
local and regional
food?
N=50, nonrepresentative
sample at family café
Are you willing to
pay more for a local
food product as
compared with
conventional food?
Willing to pay extra
25%.
How much trust do
you have in food,
which claims to be
local?
70% consumers trust
local food and in
labels
76% are not aware of
regional labeling and
believe that it would
increase their trust.
87% believe that
labeling would
increase their trust.
Multi-functionality,
possibility to expand
products,
Growing market for
organic and regional
food, increasing
efficiency of summer
season, increasing
awareness of customers
about regional identity
of food and sustainably
produced food,
networking and
cooperation with other
businesses.
Growing market for
locally grown,
organic, and healthy
food, need for
increasing
cooperation and
networking,
development of
direct sales,
technological
innovation facilitates
direct sales.
No systematic
research, in general
interest is high for a
large group.
Based on nation-wide
survey:
Based on web-based
survey of 103
respondents:
76% buy local food
2-8 times a month.
87% consider regional
food topical and 89%
consider organic food
topical
46% are familiar.
About 50% are willing
to pay 3-10% more for
regional food.
However, the majority
is not prepared to pay
much more than that.
Most trust labeling
(70%)
Only 50% have trust in
geographical labeling.
Capital availability,
low negotiation
leverage with big
companies, local
knowledge in the
family, overworking,
seasonality,
Diseconomy of scale
(high costs for
development of new
products, purchasing
new technologies),
recruitment of skilled
workers, uncooperative
administration, no
60% trust.
Food safety (X3)
Diseconomy of scale (X4)
What are
disadvantages of
local and regional
food production?
High cost of
products, difficulty
of communicating
quality to customers,
logistical challenges
to serve small
number of
customers, seasonal
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Anton Petrenko, concept paper draft 3, 20 January 2014
What are the
risk/threats for your
local food business?
Why?
character of business
(short vacation
period, tourists),
capital availability,
shortage of qualified
staff
underused capacity.
experience in
marketing, odor
nuisance, seasonality.
High costs of
production, low
appreciation of value
of quality by
customers, poor
knowledge of
legislation, small size
is vulnerable, need
for evidence of
health effect of
ecological food,
shortage of
competent staff,
economic downturns
that affect demand
for services,
environmental
degradation and
climate change
(raising seas levels)
Economic
downturns, cash
flows, increasing
competition,
bureaucracy, food
safety, stress, staff
turn out, high costs
of products,
customers that
appreciate value of
local food, low
margin of profit,
excessive
regulations.
Seasonality of tourism
(closing down in
winter), management
of succession of
business, food
scandals, decrease in
tourism, increase in
transport costs, climate
change.
High taxes, cash
registers, small
producers, capital
accessibility,
environmental
regulations, low
competitiveness of
small farms with
large farms.
(diseconomy of
scale), emigration of
young people creates
low supply and
rising costs of labor.
Knowledge of EU legislation and national regulations (X5)
Human capital (X6)
What is a desired
profile of an
employee for your
local food business?
Qualified and
motivated staff,
innovative potential,
management
experience and
technical expertise,
understanding of
production flow.
Skilled, technical
and management
experience,
independent,
proactive,
willingness and
ability to learn, hard
working
Skilled employee, extra
training, proactive,
hospitable, live the
spirit of “organic
farming/lifestyle”,
flexibility and
willingness to work on
public holidays,
technical skills.
?
What competencies/
capacities would you
want to develop
yourself and for your
company?
Competence
development of
employees (e.g.,
marketing,
accounting, hygiene,
knowledge of
regulations, planning
of production,
administrative
capacities),
sustainable food
making process
Lean production,
food safety, process
management,
product
development,
education of staff,
logistic and transport
solutions, better
cooperation with
authorities,
communication.
Knowledge in
negotiation, mediation
and personnel
management, customer
focus, info on support
programs and subsidies
?
Access to financial capital (X7)
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Anton Petrenko, concept paper draft 3, 20 January 2014
APPENDIX C. National report, Denmark
APPENDIX D. National report, Sweden
APPENDIX E. National report, Germany
APPENDIX F. National report, Lithuania
57